LONDON (ShareCast) - Cloud computing provider iomart lifted its dividend by more than half as three acquisitions boosted sales and profits.

The highly cash generative company increased revenues 29% to £43.1m in preliminary results for the year to March 31st, with earnings before interest, tax, depreciation, amortisation (EBITDA) and one-off acquisition costs soaring 48% to £16.5m.

The Glasgow-headquartered group proposed a 56% increase in its final and total dividend to 1.4p per share after cashflow from operations swelled by 54% to £14.8m.

But due to acquisition spending the company moved from a net cash position of £2.5m to a small net debt position of £0.4m by the year-end.

During the year iomart acquired and completed the integration of three internet hosting businesses, Melbourne Server Hosting for £6.7m in August, Skymarket for up to £1.4m in July and Internet Engineering for £1.4m in October.

Together the three businesses added £894,000 of pre-tax profits from a combined £3.7m revenue.

Chief Executive Officer Angus MacSween said: “Trading since the year end remains encouraging and in line with our expectations.

“We continue to be well placed to deliver an ever wider range of cloud services and with our growing credibility and strength we expect to be able to penetrate further into the corporate environment.

“Our experience and skills are growing and we continue to improve and invest in our systems and people to support further significant growth. I look forward once again with confidence to the year ahead."

Analyst Jonathan Imlah at Canaccord Genuity noted that the results "once again show the benefit of high operational leverage, with just over 10% growth in group overheads compared with the 29% overall revenue growth".

"We remain convinced that further EBITDA margin expansion is likely, although inevitably less pronounced than over the past couple of years."

He has nudging up his revenue and EBITDA estimates for results for 2014 and 2015 by 3% and 2% respectively, but argued that following the 80% rise in the share price over the past year, despite the day's profit taking, "iomart’s valuation can no longer be considered cheap".

"However, compound growth in EBITDA of 18% forecast to FY15 – prior to any acquisitions – and the company’s scarcity value as the high quality play on cloud services in the UK, suggest that the premium valuation is warranted. We remain buyers although recognise that further multiple expansion is less likely than perhaps a year ago."

Shares in iomart were down 3.5% at 240p at 14.20 on Wednesday.

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